Rate Matters (Tables)

The following table outlines the impact of the MPUC’s July decision:



(Millions of Dollars)	MPUC July Decision
2014 and 2015 step increase - based on MPUC May order	$	166.1
Reconsideration/clarification adjustments:
2015 Monticello EPU used-and-useful adjustment	(13.8		)
2014 property tax final true-up	(3.1		)
Other, net	0.2
Total 2014 and 2015 step increase	$	149.4
Impact of interim rate effective March 3, 2015	(3.6		)
Estimated revenue impact	$	145.8

The request is detailed in the table below.



Request (Millions of Dollars)	2016			2017			2018
Rate request	$	194.6		$	52.1		$	50.4
Increase percentage	6.4		%	1.7		%	1.7		%
Interim request	$	163.7		$	44.9		N/A
Rate base	$	7,800		$	7,700		$	7,700

The major components of the requested rate increase are summarized below:



(Millions of Dollars)	2016			2017			2018			Total
2014 multi-year rate case items:
Excess depreciation reserve	$	26.0		$	51.0		$	—		$	77.0
DOE settlement	25.7			—			—			25.7
Monticello LCM/EPU	11.2			(1.6		)	(1.5		)	8.1
	62.9			49.4			(1.5		)	110.8
Additional items:
Capital investments	128.7			12.8			44.6			186.1
Property taxes	30.2			7.6			5.2			43.0
NOL carryforwards	(6.3		)	(24.5		)	(6.5		)	(37.3		)
Other costs	(20.9		)	6.8			8.6			(5.5		)
	131.7			2.7			51.9			186.3

Total rate request	$	194.6		$	52.1		$	50.4		$	297.1

The major components of the requested rate increases and the PSCW’s approval are summarized as follows:



Electric Rate Request (Millions of Dollars)	NSP-Wisconsin Request			PSCW Approval
Capital investments	$	23.0		$	13.9
ROE & other capital structure adjustments	—			(3.8		)
Generation and transmission expenses (excluding fuel and purchased power)	37.2			42.7
O&M expenses	11.1			3.2
Sales forecast	(27.0		)	(27.0		)
Rate increase - non-fuel and purchased power	44.3			29.0
Rate reduction - fuel and purchased power	(16.9		)	(21.4		)
Total electric rate increase	$	27.4		$	7.6



Natural Gas Rate Request (Millions of Dollars)	NSP-Wisconsin Request			PSCW Approval
Capital investments	$	3.7		$	3.7
ROE & other capital structure adjustments	—			(0.4		)
O&M expenses	3.2			1.9
Environmental remediation expenses	2.9			2.9
Sales forecast	(3.9		)	(3.9		)
Total natural gas rate increase	$	5.9		$	4.2

In July 2015, PSCo filed rebuttal testimony with adjustments and modified recovery between base rates and the PSIA rider. The revised request is summarized below:



(Millions of Dollars)	2015			2016 Step			2017 Step
PSCo’s filed base rate request	$	40.5		$	7.6		$	18.1
Shift O&M expenses between PSIA and base rates	—			7.0			6.4
Rebuttal corrections and adjustments	—			—			(7.7		)
Total base rate increase	$	40.5		$	14.6		$	16.8
Incremental PSIA rider revenues	(0.1		)	14.7			21.7
Total revenue impact from rebuttal	$	40.4		$	29.3		$	38.5
Requested ROE	10.1		%	10.1		%	10.3		%
Rate base	$	1,260		$	1,310		$	1,360

The following table reflects the ALJ’s position and the CPUC’s written order (estimated):



(Millions of Dollars)	ALJ			CPUC’s Written Order
PSCo’s filed 2015 base rate request^(a)	$	40.5		$	40.5
ROE	(7.8		)	(7.8		)
Capital structure and cost of debt	(0.5		)	(0.5		)
Cherokee pipeline adjustment	4.1			4.1
Move to 2014 HTY	(14.1		)	(14.1		)
O&M expenses	(3.0		)	(2.4		)
Other, net	(1.1		)	(1.1		)
Overall recommended rate increase	$	18.1		$	18.7

The ALJ’s recommendation, as well as the CPUC’s written order for the PSIA rider, are as follows (estimated):



	ALJ						CPUC’s Written Order
(Millions of Dollars)	2016			2017			2016			2017
PSCo’s filed incremental PSIA request	$	21.7		$	21.2		$	21.7		$	21.2
Transfer PSIA costs to base rates	(20.5		)	—			(20.5		)	—
PSIA cost recovery remaining in base	(4.3		)	—			(4.3		)	—
Projects not recovered through the PSIA	(3.6		)	(2.0		)	(3.3		)	(0.8		)
ROE and capital structure	(0.3		)	(1.6		)	(0.3		)	(1.6		)
Total	$	(7.0	)	$	17.6		$	(6.7	)	$	18.8

The following table summarizes the estimated annual pre-tax impact of the CPUC’s written order:



(Millions of Dollars)	2015			2016			2017
Base rate increase	$	18.7		$	19.7		$	—
Incremental PSIA rider revenues	(0.2		)	(6.7		)	18.8
Expense deferrals, net amortization ^(a)	(3.6		)	1.5			5.2
Estimated pre-tax impact	$	14.9		$	14.5		$	24.0

The following table reflects the ALJs’ position and PUCT’s decision.



	ALJs’ Proposal			PUCT
(Millions of Dollars)	for Decision			Decision
SPS’ revised rate request	$	42.1		$	42.1
Investment for capital expenditures — post-test year adjustments	(8.9		)	(8.9		)
Lower ROE	(6.3		)	(6.3		)
Lower capital structure	—			(3.7		)
Annual incentive compensation	(0.2		)	(0.3		)
O&M expense adjustments	(4.6		)	(4.6		)
Depreciation expense	(2.7		)	(2.7		)
Property taxes	(0.9		)	(0.9		)
Revenue adjustments	(1.1		)	(1.6		)
Wholesale load reductions	—			(11.5		)
SPP transmission expansion plan	(4.2		)	(4.2		)
Other, net	1.4			(1.2		)
Total, gross of rate case expenses	$	14.6		$	(3.8	)
Adjustment to move rate case expenses to a separate docket	(0.2		)	(0.2		)
Total, net of rate case expenses	$	14.4		$	(4.0	)
New depreciation rates	(11.2		)	(11.2		)
Earnings impact	$	3.2		$	(15.2	)

The following table summarizes the net request:



(Millions of Dollars)	Request
Capital expenditure investments	$	38.6
Change in jurisdictional allocation factors	10.9
Changes in ROE and capital structure	11.7
Estimated rate case expenses ^(a)	4.5
Other, net	6.2
Total	$	71.9


^(a)	SPS anticipates rate case expenses, for this proceeding, to be separated from the request for consideration in a separate docket.

The major components of the requested rate increase are summarized below:



(Millions of Dollars)	Request
2015 base period deficiency	$	19.7
Capital expenditures — post-test year adjustments	12.3
Depreciation, higher rates reflecting changes in depreciable lives, interim retirements and net salvage	3.7
Transmission revenue and expense, including charges paid to SPP for construction of regionally shared transmission projects	2.0
ROE, reflecting an increase from 9.96 percent to 10.25 percent	1.6
Rider revenue adjustments - gross receipts tax	1.3
Other, net	4.8
Requested rate increase	$	45.4